Do you want day trading experience without losing any money? If so, you can trade using a demo account . So you can easily practice without any fear of losing real money. These accounts are specially designed for beginners. So you will get practical experience before trading in the real market. If you want to know more about demo accounts, we can help you. In this post, we are going to introduce you to the demo account and tell you everything you need to know.
A demo account is like a trading simulator. It’s a practice account for day trading. So you can easily trade with a number of financial instruments like,
Demo accounts are specially designed with virtual money. You can use this money to trade. It’s not real. This way, you can trade without real losses. And it helps you to craft various strategies. This way you can increase your confidence by trading on this account. Besides that it also helps you to know if your broker provides good services and software.
Sign of a good demo account is that it allows you to experience real situations. The only difference should be simulated money. It should include real market situations and trends. So you should be able to deal with different conditions without the risk of losing money.
- Exploration: You can explore various markets in the demo account. Each market is different. You can check which market suits you.
- Gain experience: You can gain a lot of experience from this account. You can learn about
- Margin requirements
- Tracking profit and loss
- Opening positions
- Closing positions
- Limits and stops
- Charting: You can also learn reading charts. If you can read and interpret them. It will help you to identify patterns.
- Past performance: You can learn from your past mistakes. When using a demo account you can easily check your earlier performance. In addition, you can make appropriate strategies. So eventually it will help you to avoid mistakes in the real market.
- Trading tools: You can also understand how to use trading tools. You can use news and trend analysis to interpret price changes.
- Watch-lists: With this option you easily keep track with your markets of interest. You can also monitor those markets using a demo account.
Benefits of a demo account
Every demo account will offer you benefits. Although there are various different demo accounts that specialize in each market, you can still get multiple benefits from it.
- Familiarity Risk: There is no risk of losing money. Since you can practice with simulated money. This saves you from various losses your mistakes will cost you. You can save your money to create your account.
- Price action: You can’t read and understand price actions. You have to experience it. And what better way than practicing on a demo account. So you can learn how to speculate price movements of volatile stocks and use it to your advantage.
- Broker and platform: It’s also a way to test brokers. So you can check if they provide good service. And have an inside how their software works. If they have necessary features and options. You can also check the platform and see If they have charts, contests, etc. It will help you to compare brokers and choose one. Are you looking for a broker then you must read this article!
- Strategy: You can brush up your strategies using this account. And so you won’t be able to make a foolproof strategy in your first attempt.Besides that you might need to make some adjustments. You can do it here. So you can avoid making common mistakes.
- Forward Testing: After preparing the strategy for the market, you have two options. You can back test. Or you can take a test. Back testing is useful, but there is no thrill or courage. In forward testing, you can put it into action.
- Drawdowns: Every trader goes through this stage. These are bad days. The market turns against you. To tackle this, you can switch to a demo account. So you can practice and improve your skills. And the market will become favourable again for you.
Demo accounts have drawbacks too. You need to know these drawbacks in order to choose an account for you.
- Execution: Execution is easier in demo accounts. You can easily fill your order at the given price. This is not the case with live trading. In live trading, the price fluctuates real fast. There is slippage. When you try to fill an order, the price might change. Therefore It will affect your profit calculation.
- Increased capital: In a demo account, you can choose your capital. Traders normally choose more capital. It helps to make more profit by trading in expensive instruments. The losses are also less. But in real life, you might not have that much capital. Therefore it makes trading in some markets more difficult. And you might fail to make profit like you did in the demo account.
- Spreads: To make their market lucrative, brokers play with spreads. They provide tight spreads in demo accounts. But this is not the case in the real market. You might find wider spreads in the real market, which makes trading more difficult.
- Deposits: Demo accounts are mostly free. But still some broker will charge you. In that case you have to pay an initial payment to use this service. This becomes an extra cost, so be careful.
- Leverage: In demo accounts, there are increased leverages. It helps you to make huge profits. But in real life, it will also increase your losses.
- Deal rejection: Your deal will always be accepted while using a demo account. However in real trading, the price fluctuates. Because of this your submission and execution price changes. In such cases, your deal will be rejected. You have to re-quote again.
- Trading tools: When you trade gold, you get free charts in the demo account. To avail free charts in the real market, you have to pay money.
- Market movements: Many market movements are not included in demo accounts. Therefore you will face difficulty in real trading due to these market movements. You may also face price movements. Or interest and dividend adjustments.
- Emotions: You don’t face real emotions while trading in demo accounts. But when you actually trade in real life, you may face different emotions. These emotions will affect your performance. Some emotions are,
- Fear: Fear of losing money will stop you from taking chances.
- Greed: Greed for more money will make you incur losses.
- Hope: Hope can drain your capital.
- Complacency: You might not take huge risks while trading in a demo account because the money is fake. However if it were real trading, you might take huge risks. This can be bad for you. So you should know how much risk to take.
- Overtrading: Traders often overtrade in demo accounts. But when you move to real trading this habit can affect you badly. You might get addicted to overtrading. Which is not good for your health. In the real life market, quality matters, not quantity.
So, when you compare the benefits and risks, you will know if you want a demo account. There are many benefits. But you should also be aware of the risks. By knowing the risk already, you can avoid it.
How to open a demo account?
It is very easy to open a demo account. You can easily open a demo account with any platform. All you need to do is go to their website. There you will find an online form. You have to simply fill it to make a request. You need to enter few details like,
- Email address
That’s all you need to do. This way you will get your login credentials on your email. And in addition you will also get instructions to use the demo account. Also, some forex demo accounts don’t need registration.
There are many popular demo accounts provided by various platforms. Each demo account is suitable for various markets. You need to see which one suits your trading style. Here are a few reviews of demo accounts for you. Find the right one for you.
At this broker you will find one of the best demo accounts there is. The account is mainly focused on forex . Besides that the account is easy to use. It also includes a variety of tools and charts as well. Another big plus is that you can find a really strong community on their website. The users are always active. They share their reviews and experiences. And on top of that their support system is great.
One more thing you can enjoy is easy accessibility. You can easily open a forex account with them. And you will be able to use this account from anywhere. For instance, from the UK, USA, Australia, India, Canada, and many more countries.
It also supports many platforms. You can get a Metatrader 4 download. So you can enjoy using that as well. Or yet you can practice on MetaTrader 5. Besides MetaTrader you can also choose from various platforms like,
- Forex web
- Mobile trading (android and iOS)
You can enjoy this account for any time period. There is no expiry or any limits on usage. You can practice until you are confident. You don’t have to make nay deposits or spend extra money for using this demo account.
This account is absolutely free. You can use it as long as you want. It has a very strong market presence. You can find good reviews about this forex demo account. So if you are looking for a free forex demo account, this is the one for you.
The plus500 demo account is only for CFD trading. You can use this account if you are interested in CFD trading. Here are some features of this demo account,
- Flexibility: You can enjoy flexibility in this account.
- High-quality software: You will find high-quality software on this platform.
- Competitive spreads: If you shift to real time trading, you can enjoy good spreads.
You can use the plus500 demo account without worrying about expiry. There is no expiry. You can use their demo account as long as you want. It also allows you to backtest strategies. With this you can improve your strategy and avoid risks.
You can easily download their demo account. It is available on App Store and Play Store. You can download it for ios as well as android devices. It is compatible with both. You can easily use their demo account on your phone.
It is also available on their website. You can use it by setting it up on your desktop. You can also switch accounts. If you have a real trading account, you can switch. You just have to click on the switch button. You can also reset it. It will give you a new start.
You don’t even have to deposit any money. You can use it for free. It is one of the best options for you, if you are looking for an easy to use, free, trusted demo account. There are only good reviews about their demo account.
It provides one of the best demo accounts to traders. They have multiple options. You can choose various markets like,
- Crypto demo accounts: You can practice trading cryptocurrency here. You can trade without real money.
- CFD demo accounts: You can also practice CFD trading here.
- Forex demo accounts: Forex demo accounts are also available for practice.
You don’t have to go searching for multiple options. Everything is available here. You just have to register. It can be done on their website. Once you have registered, they will open 2 accounts for you. One is a demo account and the other is a real account. You don’t have to open a real account. It’s automatically opened and easy to use. You just have to go to their website. Log in and select Practice Trading Login. There you have to enter your login id and password.
You can use their account for free, so you don’t have to deposit anything and you can use it for any period of time. There is no expiry therefore you can also easily rest their account for a fresh start.
You can use their forex demo account on smart phones as well. It is available as an application. You can enjoy trading up to €10,000. Their application is user-friendly and easy to navigate. The reviews are excellent. The reviews are excellent. You can also participate in trading competitions. You can show your skills and win the competition. They make trading fun and competitive.
Now if you compare, all these demo accounts are free and user-friendly. You can choose it depending on your trading style. If you want it only for forex trading, choose a forex demo account and vice versa. You have to choose carefully though. Select an account that is close to the real account. You need real market changes, price changes and opportunities to reflect in the demo account. Choose accounts which include all real possibilities like spreads and tools. It will help you when you switch to real trading.
From a demo account to real money account
Now that you have explored the demo account, the next step is real trading. If you want to earn real profit, you need to trade with real money. Don’t be afraid. Ofcourse you need to have confidence. But if you don’t try, how will you know if you are good or bad? You can be the next big thing, don’t hold back. Here we are going to help you shift from demo to real. Follow these four steps.
- Demo – Real (Action Plan):
- Assign capital:
The first step is to put some capital away. So you can choose the amount. Also keep some reasonable amount. Don’t put too little money in, as it will limit your trades. Nevertheless keep in mind you can either lose some money or all of it. But there are chances of profit as well. Check the deposit amount with your broker. When you made more profit than the money you deposited, keep it safe for the next time.
- Open an account:
The next step is to open a real account with money. This account can be opened with any broker. You can even choose the same broker who provided you with a demo account.
- Decide trade size:
First you need to calculate the size of your trade. Then you can divide the money as per number of trades you want to make. You should at least make 50 trades to know your potential . And to become an actual trader, you need to make at least 100 trades. So decide the size of the trade properly.
- Start trading:
Aaaaaaaaaand Done! You are officially a trader now. Go and explore the endless possibility of winning.
Now that you know about demo accounts, you can use one to practice and improve your trading skills. You know how to choose a demo account. First know your trading style and then choose a demo account with your preferred market. But along with all this check all the risks associated with demo accounts. Understand the risks and try to tackle it. Choose an account which is close to a real one. There are many benefits of a demo account. It will give you practical experience. You can easily gain confidence by using them. So make sure you try one, before you start real trading.